WHY CREATING A LIVING TRUST IS A GOOD IDEA
If you've done even minimal research about estate planning, you've likely heard or read warnings about the lengthy probate process and its costs to your heirs and beneficiaries. Avoiding that process is the main benefit of a living trust. It provides for the handling of probate tasks while you are alive, including paying your debts and distributing your assets, so that when you pass on, your intentions do not have to be figured out and settled by a probate judge.
When you set up a trust, you may be the trust administrator of it or you may appoint an administrator, known as a trustee. The latter option is advantageous if you become incapacitated and can no longer manage the assets in your trust. It is similar to giving a trusted party power of attorney for your medical, financial and other affairs in the event that you are unable to make decisions or carry out certain functions in the future.
Choosing a Trust
If you want to maintain control over the items in your living trust, you would create a revocable living trust. This the best option for many people. It prevents your heirs from having to deal with the probate process, while also allowing you as the trustee to alter your trust at any time, just as you could a last will and testament.
The other option is an irrevocable trust. In this scenario, you entirely give up control of your assets placed in the trust. You are essentially giving away your estate while you are alive, so your heirs get to avoid probate court--and estate taxes.